Threshold effects in online group buying
File(s)SSRN-id2176554.pdf (442.63 KB)
Accepted version
Author(s)
Wu, J
Shi, M
Hu, M
Type
Journal Article
Abstract
This paper studies two types of threshold-induced effects: a surge of new sign-ups around the time when the thresholds of group-buying deals are reached, and a stronger positive relation between the number of new sign-ups and the cumulative number of sign-ups before the thresholds are reached than afterward. This empirical study uses a data set that records the intertemporal cumulative number of sign-ups for group-buying deals in 86 city markets covered by Groupon, during a period of 71 days when Groupon predominantly used “a deal a day” format for each local market and posted the number of sign-ups in real time. We find that the first type of threshold effect is significant in all product categories and in all markets. The second type of threshold effect varies across product categories and markets. Our results underscore the importance of considering product and market characteristics in threshold design decisions for online group buying.
Date Issued
2015-09-01
Date Acceptance
2014-06-09
Citation
Management Science, 2015, 61 (9), pp.2025-2040
ISSN
1526-5501
Publisher
INFORMS
Start Page
2025
End Page
2040
Journal / Book Title
Management Science
Volume
61
Issue
9
Copyright Statement
© 2015 INFORMS
Subjects
Social Sciences
Science & Technology
Technology
Management
Operations Research & Management Science
Business & Economics
threshold effects
group buying
AUCTION FEVER
INSTRUMENTS
VARIABLES
MECHANISMS
MODELS
WEAK
Operations Research
08 Information And Computing Sciences
15 Commerce, Management, Tourism And Services
Publication Status
Published
Date Publish Online
2014-12-22